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Paul Swinney (Centre for Cities)

After the recent publication of Centre for Cities' 'Cities Outlook 2013', Economist Paul Swinney looks at some of the specific issues felt by urban areas in relation to housing, planning and the economy and suggests that whilst Britain needs more houses, it doesn't necessarily need them everywhere.

See Paul's Presentation (below)
There has been much coverage of the need for new houses in recent weeks. But while the case for new homes is clear, there has been much less dialogue over where these new homes are required. And as we show in Cities Outlook2013, some cities need them more than others.

The UK needs more houses for two reasons. Firstly the average price of a home now stands at just under nine times the average yearly salary. And given that conservative estimates suggest that we are currently building around 90,000 fewer homes per year than required, the affordability issue around housing is likely only to get worse. Secondly, building houses would likely act as a pick-me-up for the national economy – the building of 100,000 homes is estimated to add an extra one per cent to GDP.

These arguments have been rehearsed before. But much less attention has been given to where these houses should be built. And the affordability issue is much more acute in some places than others. While the average house costs around five times more than the average yearly pay packet in Burnley, it costs almost 15 times as much in Oxford. Similar problems are seen in Bournemouth and Bristol – the cities have the 5th and 9th least affordable housing markets in Britain.

High house prices are bad for future economic growth of cities such as Oxford, Bournemouth and Bristol because they price people out of the job opportunities that are available within them. This is bad for the individual, bad for businesses in such cities and as a result is bad for the economy. A report published in January by the CBI found that high house prices were one of London’s biggest perceived weaknesses by business.

Burnley’s housing issues do not centre around the availability of housing. Indeed, building more houses there would only serve to push down prices further, hurting current home owners and doing little to contribute to the city’s long term economic performance. Instead issues around the quality of its existing stock are more pressing – at 7.5 per cent, it has the highest vacancy rate of any English city. And more than one in five houses are classed as ‘Category 1’, which are the most serious hazards within dwellings rated by the Housing Health and Safety Hazard Rating System.

This means that any policy designed to kickstart house building, such as Get Britain Building, should principally focus on increasing the supply of houses in cities where housing is least affordable. In the ten cities where housing is least affordable, such as Oxford, Bournemouth and Bristol, there are more than 100,000 homes on developments that have stalled as a result of the downturn. Not only would unlocking these sites provide a boost to national economic growth, it would help to address issues of affordability in some of our most expensive cities.

Instead of the relentless focus on building new homes, housing policy in some of our most affordable cities should be refocused to deal with issues of quality in its current housing stock. There are a number of funding pots available from Government to deal with empty homes. This funding should principally be focused in cities where problems of poor stock and empty homes are most acute.

Houses are built in places. But there is huge variation in the housing challenges that different places face. For this reason place needs to be put back into housing policy. Only through doing this will we be able to effectively deal with the UK’s housing problems. 

Read other comments and observations from the event:

Prof Martin Boddy (UWE / SWO)

Nick Boles MP (Planning Minister)

Prof Glen Bramley (Heriot Watt)

Karuna Tharmananthar (West of England)

Simon Prescott (Barton Willmore)